As the end of the year approaches, so does an important deadline for practice owners—purchasing deadlines to qualify for Section 179.
Section 179 presents small and medium-sized business owners a unique opportunity to save thousands of dollars on their taxes in the upcoming year. If your hearing care business qualifies, you too can take advantage of the benefits of Section 179.
If you're interested in saving money on your taxes this year, MedRx can show you how to get the most out of Section 179 with helpful resources and examples tailored to the hearing care professional.
What is Section 179?
Section 179 of the U.S. Code 26, or the Internal Revenue Code, refers to a part of the tax code that expresses the "Election to expense certain depreciable business assets." More simply put, Section 179 offers business owners an expense deduction for purchases of depreciable property.
In a hearing clinic, this depreciable property can include anything from waiting room furniture to new computers or testing and fitting equipment. How you decide to allocate your spending will depend on your practice's needs during the applicable tax year.
In prior years, you would have had to write off these expenses over multiple years. This process often costs more upfront and makes it difficult for business owners to invest back in themselves.
Fortunately, recent revisions to Section 179 allow businesses to write off the entire cost of an item for the same tax year it was purchased. This revision gives practice owners time to grow by allowing them to buy and use their equipment and software purchases immediately rather than depreciating them over several years.
Purchasing new equipment is one of the most common ways practice owners take advantage of the law because most audiological equipment, and all MedRx equipment, meets the qualifications of the code. These specific limitations ensure that the tax break is only exercised by true small to medium-sized businesses.
Breaking Down Section 179
While businesses in many industries can apply Section 179 during tax season, the hearing care industry is unique in operation. Below, we break down an example of a clinic purchasing MedRx equipment using Section 179. For this example, we'll assume that the business is in a 35% tax bracket.
If you'd like to calculate what your own practice's savings could be, you can also utilize the Tax Deduction Calculator found on Section179.org.
Limitations Under Section 179
Limitations Under Section 179
While all MedRx equipment meets the requirements set forth by Section 179, there are several requirements to keep in mind to ensure you get your entire deduction:
- The 2022 deduction limit is $1,080,000
- The spending cap for all purchases is $2,700,000
- You must use the equipment or software for business purposes more than 50% of the time
- The equipment must be purchased and put into use by midnight December 31st, 2022 (give your MedRx equipment at least 2 weeks to arrive!)
In 2022, Section 179 will also offer 100% Bonus Depreciation. If you anticipate your business spending more than the spending cap, you can use Bonus Depreciation as an additional deduction. You can learn more about deduction limits, spending caps, and bonus depreciation on Section179.org.
Utilizing Section 179 Deductions with MedRx
MedRx's End of Year Savings offers you the chance to purchase almost any product at a discounted rate. Our annual equipment specials save you hundreds to a thousand dollars with MedRx and even more on your taxes! Apply your MedRx equipment purchases to your expense deduction and get an even more significant discount when you write them off your taxes for 2022.
Every MedRx product meets the requirements for Section 179, including new software purchases like STUDIO, the Tinnometer, and Hearing BI. After your MedRx discount is applied, writing the equipment off with Section 179 ensures you save an additional percentage off the purchase price!
To get the most out of Section 179 for your hearing care office, call MedRx to schedule a free online demonstration of any of our products today!
Sources:
https://www.section179.org/section_179_deduction/
IRS issues guidance on Section 179 expenses and Section 168(g) depreciation under Tax Cuts and Jobs Act | Internal Revenue Service
26 U.S. Code § 179 - Election to expense certain depreciable business assets | U.S. Code | US Law | LII / Legal Information Institute (cornell.edu)
rp-19-08.pdf (irs.gov)